E - Macroeconomics and Monetary Economics

• Examining Simple Joint Macroeconomic and Term-Structure Models: A Practitioner's Perspective

  Staff Working Paper 2007-49 David Bolder, Shudan Liu

  The primary objective of this paper is to compare a variety of joint models of the term structure of interest rates and the macroeconomy.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Econometric and statistical methods, Financial markets, Interest rates JEL Code(s): C, C0, C6, E, E4, G, G1

• The Direct Effect of China on Canadian Consumer Prices: An Empirical Assessment

  Staff Discussion Paper 2007-10 Louis Morel

  The author investigates the direct effect of Chinese imported goods on consumer prices in Canada. On average, over the 2001–06 period, the direct effect of consumer goods imported from China is estimated to have reduced the inflation rate by about 0.1 percentage points per year. This disinflationary effect is due to two causes: first, the […]

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Inflation and prices JEL Code(s): E, E3, E31

• The Bank of Canada's Version of the Global Economy Model (BoC-GEM)

  Technical Report No. 98 René Lalonde, Dirk Muir

  The Bank of Canada's version of the Global Economy Model (BoC-GEM) is derived from the model created at the International Monetary Fund by Douglas Laxton (IMF) and Paolo Pesenti (Federal Reserve Bank of New York and National Bureau of Economic Research).

  Content Type(s): Staff research, Technical reports Research Topic(s): Business fluctuations and cycles, Economic models, International topics JEL Code(s): C, C6, C68, E, E2, E27, E3, E37, F, F3, F32, F4, F47

• Price-Level Targeting

  Staff Discussion Paper 2007-8 Agathe Côté

  In November 2006, the Bank of Canada announced its intention to lead a concerted research program over the next few years on the type of monetary policy framework that would best contribute to the economic well-being of Canadians in the decades ahead. The research will focus on two broad questions: whether economic welfare might be […]

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Monetary policy framework JEL Code(s): E, E5, E52, E58

• Endogenously Segmented Asset Market in an Inventory Theoretic Model of Money Demand

  Staff Working Paper 2007-46 Jonathan Chiu

  This paper studies the effects of monetary policy in an inventory theoretic model of money demand. In this model, agents keep inventories of money, despite the fact that money is dominated in rate of return by interest bearing assets, because they must pay a fixed cost to transfer funds between the asset market and the goods market.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Monetary policy framework, Monetary policy transmission JEL Code(s): E, E3, E31, E4, E41, E5, E50

• Canada's Pioneering Experience with a Flexible Exchange Rate in the 1950s: (Hard) Lessons Learned for Monetary Policy in a Small Open Economy

  Staff Working Paper 2007-45 Michael Bordo, Ali Dib, Lawrence L. Schembri

  This paper revisits Canada's pioneering experience with floating exchange rate over the period 1950–1962. It examines whether the floating rate was the best option for Canada in the 1950s by developing and estimating a New Keynesian small open economy model of the Canadian economy.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Exchange rates JEL Code(s): E, E3, E32, E37, F, F3, F31, F32, N, N1

• Cyclical Behavior of Debt and Equity Using a Panel of Canadian Firms

  Staff Working Paper 2007-44 Francisco Covas, Wouter den Haan

  We document the cyclical behavior of debt, equity, and retained earnings for different firm categories using firm-level Canadian data.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles JEL Code(s): E, E3, E32, G, G3, G32

• Trend Inflation, Wage and Price Rigidities, and Welfare

  Staff Working Paper 2007-42 Robert Amano, Kevin Moran, Stephen Murchison, Andrew Rennison

  This paper studies the steady-state costs of inflation in a general-equilibrium model with real per capita output growth and staggered nominal price and wage contracts.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation: costs and benefits JEL Code(s): E, E0, E5

• Asset-Price Misalignments and Monetary Policy: How Flexible Should Inflation-Targeting Regimes Be?

  Staff Discussion Paper 2007-6 Jack Selody, Carolyn A. Wilkins

  The authors analyze the extent to which inflation-targeting frameworks should incorporate flexibility in order to respond to asset-price misalignments and other atypical events. They examine the costs and benefits of adding flexibility to the Bank's current inflation-targeting framework, and conclude that maintaining low and stable consumer price inflation is the best contribution that monetary policy […]

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Inflation targets, Monetary policy framework JEL Code(s): E, E5, E6

• Liquidity, Redistribution, and the Welfare Cost of Inflation

  Staff Working Paper 2007-39 Jonathan Chiu, Miguel Molico

  This paper studies the long run welfare costs of inflation in a micro-founded model with trading frictions and costly liquidity management.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation: costs and benefits JEL Code(s): E, E4, E40, E5, E50